Here Comes The Millennial Generation

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Recent news stories have observed that the number of U.S. children under age eighteen is due to hit a record high in 1998--edging past the previous high reached back in the 1960s when Boomers were kids. While conceding it will be expensive to raise and educate this abundant "Millennial Generation" (born since the early 1980s), some journalists are suggesting that when these kids grow up and become taxpayers their sheer numbers will solve the fiscal woes of our aging society.

The Concord Coalition agrees that the arrival of a new and relatively large generation of children is good news. But it cautions against overstating the numbers. The impact of the Millennials has already been factored into all of the official long-term budget projections. And these projections show that today's kids are not nearly numerous enough to offset the fiscal burden of retiring Boomers--unless we change course.

An Echo Generation

Yes, birth year by birth year, the Millennials rival the Baby Boom cohorts in absolute numbers--and far surpass the Baby Bust cohorts of the 1970s. It's also true that their numerical weight is due to a rebound in the fertility rate--combined with the fact that a lot more women have recently passed through their childbearing years.

But let's not get carried away. Although they are the same in absolute numbers, the Millennials are much smaller as a share of the total population than Boomers were when they were kids--and it's the relative size of a generation that matters. Moreover, though the Millennials are the product of a higher fertility rate than the Busters, that rate remains far beneath what it was during the Baby Boom. From 1946 to 1964, the U.S. total fertility rate averaged 3.3--high enough to double the population every two generations. Since 1980, it has averaged 1.9, which is below the so-called replacement rate. In other words, if we kept having babies at the rate we're having Millennials, the United States, absent sizeable immigration, would eventually depopulate.

The Millennials have rightly been termed an "echo" or "boomlet" generation--since in fact they are mainly a demographic aftershock of the postwar Baby Boom. And now, as more and more Boomers move beyond their childbearing years, even the echo is fading. While the total number of U.S. children under eighteen is still rising, the size of Millennial birth cohorts, after peaking in 1990, has declined in every subsequent year.

A Permanently Older America

The notion that the arrival of the Millennials has somehow altered America's demographic trajectory is simply wrong. As Boomers retire starting around 2010, America is still due to become dramatically--and permanently--older. Today, the ratio of taxpaying workers to Social Security beneficiaries is 3.4 to 1. In 2030, when Millennials are in the workforce and Boomers are retired, the ratio will be 2.0 to 1. In 2065, when the Millennials are retired, it will be a still lower 1.8 to 1.

But even if the Millennial Generation isn't the demographic force that is sometimes claimed, it is already having a positive impact. All the lavish attention that the media and political leaders are bestowing on today's babies-on-board helps older generations focus on the issue of fiscal stewardship--and how to ensure that America's aging does not overburden the future.